"Business tax cuts are proposed as part of the economic stimulus included in the American Recovery and Reinvestment Act of 2009 (H.R. [House Resolution] 1 and S. 1). Major generally applicable provisions include an extension of temporary bonus depreciation and an extension of loss carrybacks. Bonus depreciations provisions were enacted in 2002, as increased interest in providing business tax cuts to stimulate the economy followed the terrorist attacks of 2001, which heighted concerns about an economic slowdown. Among the tax proposals discussed were a corporate rate cut and an investment subsidy. A March 2002 tax cut contained temporary partial expensing (bonus depreciation) for equipment. Interest in this issue continued, including proposals by President Bush for reductions in taxes on corporations through temporary dividend relief, which were enacted in May 2003. The temporary bonus depreciation expired at the end of 2004. Dividend relief was extended through 2010 in legislation passed in 2006. Temporary bonus depreciation was also part of a recent fiscal stimulus package adopted in 2008 (P.L. [Public Law] 110-185). Some economists doubt the efficacy of fiscal policy in general even when a stimulus is needed, especially in an open economy and given the difficulties of achieving proper timing."
CRS Report for Congress, RL31134
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